timeline, very quick. >> you could start making investments now but i would focus on the 2021 and 2022 policy impacts, not on who's going to win or who's going to lose so that means health care, those types of things. >> we appreciate it very, very much thank you. we want to wish everybody a fabulous weekend happy tequila day, joe i'm going to get on this a little bit later have a great weekend, everybody. "squawk on the street" begins right now. good friday morning, welcome to "squawk on the street." i'm carl quintanilla with mike facebooker and david san tolly futures are weak following the worst day in a month intel's results don't help china telling the u.s. to close its consulate in chengdu gop stimulus will have to wait until monday we think.

oil, 41.40 we talked for a long time about mike pence's hawkish speech on china from a year or two ago but pompeo yesterday one-upped that and this consulate news from china is weighing on sentiment too. >> yeah, he upped the ante jim did focus us at the time on vice president pence's speech because it was quite truck lant would be a word to describe it at the time but it continues to go up in terms of the tensions, carl we've talked about it pretty much every day, whether it's a back-and-forth over huawei, whether it has to do with conversations about closing down the app tiktok in the united states, whether it is the closing of consulates here and the response from the chinese. this is not going in a direction that many, who at least are invested in the idea of global trade, certainly, mike, would wanting to see. >> for sure. on the one hand the market is not necessarily overly focused

to this point on these relationships and not really counting on anything to come out of it. it's not quite like the suspense leading up to some kind of trade deal which at least promised to lift the threat of further tariffs. this is much more background noise. it's a sense of i guess we're going to be in for a phase the next few months of a couple of candidates competing to be tough on china, how we'll have to worry about this that said, i do think the market is dealing with its own issues and this is just one of these unwelcome kind of things from a different direction. the market is dealing with huge tech stocks pulling back after getting overheated, over loved, over crowded, overowned. and the real question is can the rest of the market absorb that is this is all going to be as it is now a routine pullback in some of the favorite names so far it's okay, it just seems like the market as a whole is back in the trading range we got stuck in for six weeks starting

in june. that's where the s&p sits right now. so the china stuff on top of it absolutely not welcome, but i don't think that this was a market already geared for some kind of global trade revival that this would now threaten, carl. >> interesting, mike you mentioned the earnings names that have not done well in the wake of results. netflix, intel we'll talk about in a moment, microsoft, citrix if we're relying on ex-tech to support us, it's going to be a challenge given that open table, global mobility, they're all suggesting that the economy if not rolling over is at least flattening out. >> yeah, we're not seeing the growth that we were a month ago, even the jobless claims number, carl, also showing a weakening again perhaps. and that's the concern california, texas and florida are not insignificant states

i know everybody knows that. they're the three largest states in the country their economies alone are enormous taken together, that adds up when they are all dealing with -- well, you heard governor abbott earlier on "squawk box" of texas he's talking about a plateau there but they're not ready to fully open up again after having rolled back a bit in terms of what's going on. and economic activity in those states, particularly that of consumers in terms of going out, going to restaurants, bars, and all the other things has pulled back a bit that's going to have an impact, mike although, again, that's one sector of the market and not necessarily related to the big names that as you pointed out have leveled out a little bit of late but certainly have powered us for some time. >> it's interesting because you do have that unease about exactly what the cadence of this economic revival, if that's what it's going to be, is right now 10-year treasury yields still

under 0.6% there's going to be a ton of economic slack for a long period of time. but the way the market department with that was we'll just hide in the big nasdaq stocks because as a category they represent quality and safety so maybe that trade is being challenged just a little bit right here and actually not quite in the faang area, but in big tech we are going to dig deeper into intel following those numbers last night it's warning of a delay in developing new chip technology shares tumbling this morning, back into negative territory for the year it's been pretty much a unanimous and vociferous voice from the street that it was a big disappointment joining us now, joseph moore joe, good morning. put this into context for us in terms of the reaction to this news that intel had yesterday of a delay in this generation of new products, and what does it mean for the competitive landscape for intel and i guess

is it now getting already built into the valuation >> hi, good morning. it was a lot of moving parts to the intel numbers, both the product delay and the third-quarter guidance indicates some issues. in terms of the product delay, the company has struggled the last couple of years they seem to be getting on somewhat firmer footing but the comment they made last night is that the first seven microprocessor products are delayed from the first half of counter '22 to second half of counter '22. it's probably more concerning in light of the yongoing issues the have had instead of a six-month issue. a mitigating factor is they have also talked about willingness to use found reand outsource to make sure products are on time

i think a delay of the whole product road map, i think the hope they're expressing on the call is we'll still have our product portfolio on time even if we need to go external to get there. and that's a big departure for intel. so overall certainly the product issues remain a little bit of a concern. i'm probably more focused on the second-half guidance and the issues that may present. certainly the product issues are a little daunting as well. >> now, the outlook implied by the second-half guidance, joe, does it mostly come to bear with intel or is it more of an industry call? because you're seeing right now amd rallying this morning on the intel numbers. >> yeah. and i think -- you know, intel's market share and data center is still 95% so it's hard to look at it as being too company specific i would say the interesting dynamic this year is that intel has called out since january that this would be a very front-half loaded year they expected there to be some

digestion in the second half and so they are guiding in line with that when you look at it in the third quarter of the last five years, intel has grown 13% sequentially and they're guiding down 8% sequentially so 20 points below seasonal with pcs being down in a seasonally strong quarter and data center being down quite a bit i would view that as being a challenge to the overall compute space and that's been our view compute has been really strong in the first half and you need it to rotate toward more cyclical economic exposure for the back half. i think that's playing out and i think we will see it in other names. as far as amd, they're going to be a direct beneficiary of any delay at intel because they directly compete so i get that reaction amd is reporting next week and they have exposure to parts of the market that are probably a little bit more robust than intel does so it makes sense the reaction that we're seeing there, but i would say that intel is signaling that there's going to be a digestion window for server

and cloud -- >> and where does that take you to in terms of a bottom line on intel. right now you're talking about under 12 times expected earnings for this year, presuming those estimates don't go down too much obviously you have valuation in your favor is anything else >> yeah, i think it's a very inexpensive stock. you know, when we downgraded it in june, we sort of highlighted that you're exiting this year at a pretty low run rate that i think next year numbers look pretty optimistic. if you look at their guidance that they gave last night, they're implying q4 is $1 to $1.10. next year's number is close to $5 that number needs to come down quite a bit. so the stock is not quite as inexpensive as it looks on forward-looking numbers. their cap ex is will above depreciation so the stock is inexpensive. i'm not sure it's inexpensive enough to be exciting of its own if we're going through this weak

period so i'm still a believer in where they're headed long term i think they can get through these product cycle issues, but i think they have a pretty tough year in the next 12 months and i see the stock as kind of holding ground but not really showing that much upside in this environment. >> joseph moore, thanks very much for weighing in this morning. >> thank you. and stay tuned for a first on cnbc interview with intel ceo bob swan at 11:00 eastern. david. >> thanks, mike. yeah, i wanted to get to goldman sachs this morning as well because we got important news from the invest bank it has settled with the malaysian government on the 1 mdb scandal. what a scandal it is a development bank essentially raised as much as -- i think it was over $12 billion over time, but at least $4.5 billion of that was embezzled, was just spent on who knows what. financing movies like "wolf of wall street" and all sorts of

other things goldman raised a lot of debt for 1mdb and got paid as much as $600 million in fees and we've been talking about a settlement now for years. when david solomon ascended to the role of ceo he talked about trying to get this behind them as one of the things he was focused on this is a very important development. it's a $2.5 billion cash payment so it is well below some of the numbers that we've heard from the years. the malaysian government asking for perhaps at times as much as $7.5 to $8 billion there was $1.4 billion in guaranteed recovery value of assets but this refers to assets that have already been identified that 1mdb went out and bought that have been valued that will either be sold or they can borrow against them. so it doesn't mean cash is coming from goldman sachs to the malaysian government to cover that so the total is $3.9, but the really important component is

the $2.5 billion in cash goldman has been increasing its reserves, its litigation reserves it will add to its second quarter reserves as well its provision for that will increase materially it says as a result of that and that will be reflected of course in their filing still to come, though, is a settlement with the department of justice, which wanted a global settlement but has been waiting to see what goldman would do with the malaysian government before moving ahead is it imminent i'm told no, but it should be fairly near term in terms of the settlement there we don't know what the numbers are going to be, guys. it could be another 2.5, 3 -- who knows in terms of money, but it certainly is not expected to be more than what they're paying at this point the malaysians but i will leave that in the realm of speculation overall though, mike and carl, this is seen as a positive for goldman, finally starting to get this incredible scandal behind

them >> that's an amazing chapter being put to bed we hope for goldman's sake, david. thanks for that. i think we'll take a break here we've got a lot to get to. american express obviously we haven't touched on, verizon results and we'll talk to hans later on this hour gold above 1,900 for the first time in nine years and intel with four downgrades looking at its biggest drop on earnings in nearly 20 years. we're back in a moment save hundreds on your wireless bill

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covid cases in this country passing the 4 million mark, adding 1 million in just the past 15 days hospitalizations near a new peak let's get to meg terrell for all the latest hey, meg >> hey, carl well, new cases in the u.s. around 70,000 again yesterday, staying at this sort of new plateau. hospitalizations approaching that peak that we saw in the spring and deaths also increasing another day with more than 1,000 new deaths yesterday per capita new cases in terms of the states adding the most, still florida, texas, california, arizona. but also a number of other states, more than 400 cases per million people yesterday nevada, louisiana, alabama and georgia. this, guys, as we're seeing testing turn-around times getting longer in these places, as long as two weeks for some

quest diagnostics customers. with that in mind, i wanted to try out a different kind of testing and i tried an at-home test collection kit using the rutgers saliva test from a company called vault health. here's my experience, check it out. i ordered the test kit on a wednesday afternoon. answering a few questions about any symptoms and potential exposure to covid-19 the test kit arrived by u.p.s. the next morning the next step was to collect a sample vault requires a medical professional supervise through a zoom call. i was surprised to see someone right away when i clicked into the website. she guided me through opening the kit and spitting into the tube it's not complicated but it's more than you expect you package it back up, wipe down the shipping materials and drop it back off at u.p.s. or fedex. i got notification my sample arrived the next day its turn-around time for results is 48 to 72 hours. >> anything after that i would

worry about people taking tests and thinking the tests mean anything >> sure enough i got an email saying my results were in. negative this is not the only company providing at-home test collection the fda has authorized about a dozen companies to provide this service. important to note, this is just home collection, this is not yet that sort of holy grail of actually being able to perform the test at home, sort of like a pregnancy test that is the homelaped-for next . guys. >> meg, it's david the key question here is accuracy also on these instant tests or i should say the rapid tests as well major league baseball dealing with as this juan soto negative, negative on those but positive on the one that is more conclusive. what about how much we can actually believe when we get the results? >> it's the question, of course. for this test, this is the

rutgers test that got emergency use authorization a few months ago. the company says that they have perhaps a false negative rate of around 10%, which they say is better than other pcr diagnostics tests. as you point out those point of care tests, the ones that are done with the abbott machines or the antigen tests, they do tend to have a higher false negative rate, so it's recommended if somebody has symptoms to be retested if you get a negative with a pcr, another kind of pcr test but of course all of these, that is the main question >> yeah. it's got to be better than what's going on right now. meg, thank you meg terrell of course reporting on all things related to the spread of the virus and the treatments for it and the testing, of course. let's take a look at shares of verizon because we're going to be speaking to the company's chairman and ceo later in this hour verizon reporting earnings today following at&t yesterday

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china ripped off our intel jacket trade and it's causing millions of jobs across america. it sucks supply chains from america. we stopped huawei is -- we've called it what it is a true national security threat and we've taken action accordingly. >> that's the secretary of state yesterday talking about what he called the virulent strain of communism out of china and asking the chinese people to distance themselves from xi. we'll talk more about that speech and how it may impact american business and american investing in a moment.

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china has ordered the u.s. to close the consulate in chengdu in retaliation of the u.s. closing the chinese consulate in houston eunice yoon is in beijing to talk about what this means in

terms of tensions and how strained they're becoming. hi, eunice >> they're very strained, carl the chinese foreign minister referenced the deterioration in relations with his german counterpart today saying that the u.s. is entirely to blame for these difficulties and that no country, he said, with a conscience would side with the u.s. on china. now, these comments came after secretary of state mike pompeo made that blistering speech overnight where he was calling on countries in the free world to band against china and just stopped short of asking for regime change here in china. the chinese foreign ministry as we expect dismissed those remarks. they also said that they had told the consulate in chengdu to close up, that they would be closing, and state media says that it's going to be 72 hours in which the staff there will

have to leave. state tv has set up a live cam so that the population here can watch people leaving, once they start walking out, if they do. 38 million people have been logged on watching the activities with some people asking when the fire brigade would arrive, referencing the widely distributed video of the consulate in houston purportedly showing chinese officials burning documents in open bins now, the state media has been explaining why chengdu was chosen their argument has been that this is a consulate that is very important to the united states because from the chinese state media perspective, they believe that the u.s. tracks what happens in tibet, very sensitive for china, from that consulate and that they gather information on strategic weapons as well in the area

at the same time, that consulate is much smaller han, say, beijing or shanghai and less significant the chinese believe to the overall u.s./china relationship, especially when it comes to business. so the signal that state media say beijing is sending is that they want to show that china is tough against the u.s.' actions. at the same time, they want to show that there is some room for negotiation and that they don't want to see any more escalation. >> eunice yoon talking about the consulate move today, which is obviously weighing on sentiment. eunice, thanks mike santoli, it comes at the same time that the uk has suspended the extradition treaty with hong kong it will be interesting to see whether or not china thinks this is a group effort, this pressure that's being put upon them. >> right you know, i do think we have a little bit of a game theory thing of trying to gauge what is

a commensurate response or escalation from here i'm not sure how exactly that filters into the outlook for business that are now dealing with more acute crisis right here or for trade flows or anything like that you look at gold over $1,900 an ounce. many, many reasons for that. negative real interest rates and momentum and concerns about central bank policies, but this isn't necessarily hurting the run in gold. the yen rallying against the dollar, things like that so it's one of those things you have to kind of have it on the dashboard to see if it becomes more of a day-to-day market influence. >> mike, you're absolutely right. dollar/yen four-month low. we'll get economic data. meantime new home sales at the

top of the 10. there's the opening bell, guys the s&p you can see on the cnbc heat map axp, 29 cents was a beat but revenues did miss. provisions 1.6, global customer spend down 20 in the first half of july, david that was better than the down 40 on the april trough, but t & e, man, down 75 and a lot of that is corporate travel. >> amazing, and we all know of course business people are not traveling, or certainly many of them are not one of the key questions longer term is how many will return to what was a regular schedule of getting on flights certainly in the world of which i'm a part with investment bankers and the like, it does seem -- and ceos and senior executives, it does seem as though there is going to be a reduced amount of travel even when we do get to the other side of the pandemic on the business side but you're right, carl we were watching these numbers

closely. they did end the second quarter at american express with $6.6 billion of credit reserves that's $2.2 billion higher than the reserve level they had on their balance sheet after -- at the beginning of q1 and as you point out, $1.7 billion of credit reserves they added at the end of the first quarter, another $628 million reserve build was taken in the second quarter, as we take a look at those shares now, they're not doing as much volume, so at the same time you don't have as many people who are not paying back bills because they didn't actually charge >> yeah, david i was going to say -- >> mike, i don't know -- go ahead. >> it's in this weird intermediate zone. the more kind of traditional credit card issuers have been some of the weakest stocks in the market, if you look at capital one and discover and things like that

obviously american express always gets a premium on them. and those guys are seen really as very key reopening type plays. a lot of days they're either the best or worst performing group american express is in there with this other set of challenges not too much worry on the credit side as you say relative to the other ones, but yeah, where does the kind of high end and business spending come back. that's the big question, carl. >> yeah. mike, something we've been talking about -- sorry, carl go ahead >> go ahead, david i was just going to say the barbell on the s&p this morning is indicative of the conversation around chips. intel is the biggest s&p loser, amd is the biggest s&p winner. this note out of bernstein, david, as they go to underperform, pretty remarkable comment here ordinarily we frown on moving ratings directly on an earnings night, but this, our 45th intel

earnings call was the worst we've seen in our career covering the company from here we see things growing increasingly painful as we said, i counted at least five downgrades from deutsche, barclay's and others. >> and we had that analyst that joined us at the top of the hour, mike you mentioned amd which i think is important i'd like to take a look at that but that is quite a significant loss as we learned, it's not a loss of market cap, it's not just about the delay in the chip as you look at amd surging there, it's also about the second-half guidance but interesting that amd is continuing to build on its growing strength as it really has become over these last -- well, let's call it five years at least under the leadership of lisa su. bob swan of course is coming up later. >> it's amazing and shows why tech investors are often so hesitant to lead with the value proposition. intel has been cheaper than

everything for a long time people talked about nvidia having surpassed it in market cap. amd always looked super expensive if you looked at the traditional metrics. but basically the companies with the market share and momentum and the kind of better path to the next technology are the ones that tend to win you're definitely seeing that in the market today >> yeah. speaking of the market overall, mike, something we've been talking about of course is the level of additional potentially speculation and the interest of retail investors i don't know if you saw the numbers from e-trade of course e-trade is getting bought by morgan stanley which is looking increasingly like a very good deal for them. mike, i know you've been covering this. they added 1.01 million daily active revenue trades in the second quarter or reported 1.01 million daily active revenue trades, and they added, what was the number, 327,000 new retail accounts put that in comparison for the

second quarter of last year, they added 34,000 accounts. >> yeah. >> that's quite a move. >> it's amazing. the entire industry saw a rush of new customers we talked about the shutdown effect and just this idea that you have such dramatic market moves in a concentrated period of time, it drew a lot of folks in it's really wrong to talk about the robinhood traders. maybe that's just the name we're giving everybody who's kind of new to this on a small-time basis speculating. other indicators, if you look at options trading volume, goldman sachs had some numbers, it now surpasses share volume a lot of those options, it's just surged in the last several months a lot of them are very short dated, so really they are just these binary short-term bets it's very, very high churn type activity it's good for the brokers. the question is, is it just a phase where we're seeing this new experimental money, people getting into it, seeing how it works. by definition it's zero sum minus the costs, right

so if that's all this is, then it might not be something that's enduring and companies like schwab long ago went to more of an asset-gathering model rather than just promoting volume but it's very interesting to see this new element in the market at the same time where a lot of traditional investors, whether traditional retail or even big institutions havebeen a little hesitant to kind of embrace risk right here, carl >> carl, you know, something you've been focusing on and you asked the ceo of at&t yesterday was related to movie releases. we did get some news this morning from disney delaying indefinitely the release of "mulan" and pushing back "avatar" and "star wars" at least a year the relationship of producers and distributors of movies and those that show them is changing dramatically it's unclear where it's going to ends up in terms of when the

exhibitors will be able to open up widely speaking and have people going again and what the approach is going to be of the disneys, of the warners, of the paramounts as welch i think also had news this morning about an upcoming movie that was planning to go to the big screen and may end up on the smaller screen. >> i know. paramount pushed back the sequel to "top gun," david. this is the fourth delay for "mulan" which was originally a march release. even as amc insists they're going to reopen in mid-august, so a lot of conflicting signals regarding theatrical distribution i did notice our own parent, comcast, got near 44 this morning. that's the highest since february 26 as they have this renewal, multi-year renewal on an agreement with sinclair but man, david, media is tough, especially on the studio part. >> no doubt. and, you know, again, we're going to keep a close eye on

this changing relationship because it really is a significant one that is in the midst of great upheaval, as so much else is guys, deal news this morning nrg announcing this morning fairly large deal in fact, $3.6 billion transaction this morning for that energy company. let me just find -- there's a look at nrg. i also wanted to see the owner of direct energy, i don't know if we have it, but they had on their books this asset, direct energy, at a number that was far less than the $3.6 billion or so that nrg is spendsing all in cash and so you saw very positive response in those shares in trading in the uk this morning as a result. but again, a utility deal of

some size and significance, over $700 million in ebitda contributed in direct energy carl. >> guys, i was going to just mention tesla. it's not news driven but it's down under $1,400. it spent yesterday very, very nonreaction to its results the night before it seems like it's part of this whole momentum unwind. hard to say you look at that chart and say anything has really changed it's really just giving back some of this massive run higher. the 20-day average for this stock, not to get all technical, but it's 1390. so it had this huge move back down and it's only gotten down to its average price over the last four weeks so it just shows you how extended the stock had gotten there we'll have to see if this is a more broad risk indicator for this category of stocks, carl. >> yeah, tesla was near $1,800 on july 13th

as you can see below $1,400 today. we'll talk to verizon's hans vestberg about their company's results. 60% of retail open what's happening with the american consumer? the dow is down 165. usaa is made for what's next no matter what challenges life throws at you, we're always here to help with fast response and great service and it doesn't stop there we're also here to help look ahead that's why we're helping members catch up by spreading any missed usaa insurance payments over the next twelve months

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the dow is headed lower for the week but there are some gainers week-to-date led by chevron, coke, pfizer, mcdonald's, raytheon we're going to talk to verizon's hans vestberg in a moment on a beat on top of the bottom line and even some guidance when we come back. rn on my tv and boom, it's got all my favorite shows right there. i wish my trading platform worked like that. well have you tried thinkorswim? this is totally customizable, so you focus only on what you want. okay, it's got screeners and watchlists. and you can even see how your predictions might affect the value of the stocks you're interested in. now this is what i'm talking about. yeah, it'll free up more time for your... uh, true crime shows? british baking competitions. hm. didn't peg you for a crumpet guy. focus on what matters to you with thinkorswim. ♪

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with peacock premium included at no additional cost. no strings attached. got some flash pmi data. for that we'll get to rick santelli good morning, rick. >> good morning, carl. keep in mind these are july preliminaries. this series started in july of '17 so three years and running, 51.3 on a manufacturing pmi. that's the best level since january, and of course the all-time low there was 36.1.

that was in april. we look at the pmi for the service sector 49.6 not quite up to 50, but also the best level since january and the low read there was 26.7 in april. the composite pmi right on 50 on the nose and do keep in mind that we are seeing lots of excitement in the foreign exchange markets the euro is king today against the dollar and the chinese currency carl, back to you. >> all right, rick, thanks for that rick santelli. as we said earlier, verizon's hans vestberg will join us on this friday morning in a moment. don't go anywhere. businesses are starting to bounce back. but what if you could do better than that?

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shares of verizon having a good morning in response to the company's earnings in which it reconfirmed prior guidance adjusted eps growth seen at between negative 2 and plus 2% overall capital expenditures for the year still in a range of 17.5 to 18.5 billion let's bring in the company's ceo hans vestberg to learn more. hans, always good to have you join us. i want to start off on the state of the u.s. consumer because you have a good window into that given how important wireless service is to most people in terms of paying that bill. specifically the 1.5 million or so people who are on the keep america connected pledge what did you see from those people in terms of their ability to continue to pay all or part of their wireless bill >> thank you, david. it's great to be on the show first of all, what we're seeing in this quarter of course by the impact of the pandemic, the economic downturn that we had in the first quarter, but what is

encouraging to see is that almost 80% of all these customers that have pledged to keep america connected, which means connecting them due to financial problems in this times, 80% of them are paying some part of their bill. so there is an this up, and we work with all these customers in order to refinance, and all that this is not unusual. i would say our dlin kwint similars are close we have a loyal custom base. i believe all these customers will continue to be our customers one year from now. that's how we work and we want to keep our loyal customers to work with verizon. we feel pretty good about it >> right and is that why you chose to keep them counted as customers even if they're not paying their bill we heard from at&t yesterday they made a different decision

340,000 people who weren't paying even though they were kept connected, they did not count. why did you take a different approach >> as i said, 80% of them are paying some part of their bill so these are customers that we believe will continue with us, and always -- on the base of over 100 million consumers using verizon every day, of course, you always have some customers having financial troubles, and that's no more now than before or prior to the pandemic again, we have systems and we work with our customers. so we believe we're going to keep the customers >> yeah. are you concerned? i would have to imagine you are, though, for example, in the exploration of the $600 additional unemployment benefit? i would think that's helpful for people to continue to pay their wireless bill. to the potential slowdown in the economic reopening and the vitality that we saw at least in parts of may and june. is that a concern for you right now? >> i think what we're seeing in

the second quarter has been important, and if they go forward or not, of course we'll work with them there might be a slight impact of it, but we also need to be reminded that the mobility broadband services are essential in today's work. our customers need it for being in contact with friends, not only that, doing business. so this is essential infrastructure as needed again, i think it's going to be important. and that shows how resilient our business model is even if it's a downturn as well as an upturn. i feel really good that we're the best network and that customers are staying with us. >> yeah. you know, we talked in the past, of course, about 5g for obvious reasons. so important to your current strategy some reports around today that apple may delay the release of the 5g phones. i know on the call you were asked about it you said you wouldn't comment on that specifically, but you did say as well certainly that apple is very important to that

overall eco system when are we going to start to see the phones out there in a significant way using the network that you're constructing >> no. you're right you and i have talked about our 5g strategy for a long time. i'm really excited we are so much -- so many launches coming in the second half of 2020 and we're basically on plan or ahead of all the things we've committed to important is that we are building a transformative 5g which is with the ultra wide brand with the highest speeds in the world and then we'll have nationwide in the second half, and then we'll also have the best 4g network nm our customers will get a great opportunity with a high penetration in the verizon custom base. it's going to be a more important event when apple comes out with a 5g phone. i'm excited. we're going to be ready. we have a great network as well

as having the best 4g network. i think our customers are going to feel how transformative our 5g it's transformative. i'm excited. i think our customers are excited as well. >> obviously the past few months we've been in an economic crisis it's hard to know the underlying trends in terms of competition have you seen any changing in dynamics following the t-mobile sprint closing their deal. it's only been a few months but what do you expect in terms of the competitive landscape? >> i think we're well positioned we worked with our network for three years to put them in the best place for 5g and all the things i previous talked about we have worked with our mix and match, our customers have a chance to work with us and in this quarter, we had a record up tick on our premium unlimited. so our customers are moving up the ladder to be part of our

services and thinking about those. i think running the verizon consumer group, there's a good plan how to compete if it's needed this is nothing new for us we have been leading this market far long time. everybody is trying to beat us we will not let them beat us we will execute on our plan that we have. >> verizon media group not an overly significant part of your operations but a big dollar number given the size of the overall company. advertising is tough to be in right now. do you have any expectations or guidance to give or is it too hard to know what's coming with verizon media group? >> first, verizon media group has done an outstanding job in the second quarter our active users using all our

services like finance, it has been growing tremendously. but the advertising, that has come down, and we came down 24%. it was expected in this quarter, but we saw in the last month of the quarter, that's now coming down slightly, down to probably 90%. we think that in the third quarter we'll come down to lower double digits. we clearly see that changing on the advertising side but let's see how it turns out clearly our plan is to move that remember, verizon media group came from a situation with double digit recline, back to zero and then the pandemic happens. we have a good base and the team has done great on our new products >> speaking of advertising, you suspended our ads on facebook. are you revisiting that at all can you give us an update on that >> first, our brand, we feel that we're a premium brand and it's important where we show up.

and in this case, the content that was not appropriate showed up close to our brand, and we have commercial agreement with facebook and other advertisers and when that happens, we take course and we tell them this is what has to be remedied. that conversation is ongoing with facebook. we have given them the things we think need to be things for us to feel safe to go in there again. the conversation is continuing it's not concluded, but this is nothing strange for us we did the same with youtube two years ago and fixed the problem. hopefully we'll be able to fix this problem with facebook as well >> do you know when? have you had any conversations with them about it >> no. yeah we've had a lot of conversations with them about it, but i don't have a timeline. my team is talking to the team of facebook to help find resolutions. we haven't found them yet, so i don't have a timeline. >> finally, i'd love to come

back to something we always talk about which is 5g into the home. i mentioned it in part because we were joined yesterday by the ceo of at&t. he seemed to indicate that in his opinion, the home wireless 5g to the home is not going to be a replacement for broad band. you've taken a somewhat different tact how do you respond to those who say it's not going to get there. sure, it's great, but people are not going to be using it as a replacement for wired broad band >> first of all, i cannot respond to comments from someone who is not doing it. we have been doing it for two years. we are really excited about it as a broad band replacement. we are doing self install. our customer will be able to order the ct by themselves, set it up and have broad band at the home without having a field tech coming to their home i think it's just a totally

transformative business we're creating we have said in the second half of this year we'll have our next generation of ct which is the router at home that's going to be more powerful and that's going to make a huge difference so we're going to have 10 plus markets we're going to launch in the home this quarter. we feel this is a really good solution, and it's a transformative and it's the next generation of giving broad band to everyone that needs it. so it's a totally different business model and we are excited about it >> and you have the network in place to be able to deliver that right? you don't need to necessarily buy anything to add or help the delivery into the home >> this is our model we've been one network with multiple services. 5g mobility and the same technology and the same station, 5g home and 5g mobile edge compute. that's an enterprise service with low latency we announced

with amazon that's year where we bring in the compute processing for doing low latency transaction. think about a factory that's going to have the robots connected to 5g instead of cables, how quickly they can refurbish it we've been three business cases on the same infrastructure this was the strategy we outlined already planned in '17 when we built the verizon intelligent network. a lot of things are coming together for us in the second half of this year. >> and we'll be watching closely. certainly, that lack of latency so important in every conversation about 5g. thank you as always. appreciate you taking some time. >> thank you, david. all right. rick santelli brought us pmis a moment ago he has new home sales this morning. >> carl, i hope you'resitting down this is quite a spectacular number for june read we're suspeexpec 0

700,000. it was close to a 14% jump i find it amazing because you have to go back to 2007 to find numbers this n this range and zero in on how powerful a number this is, let's go east to diana. diana, great number. don't you think? >> rick, yeah. and i am not surprised in the least bit. i didn't believe that street prediction of just a 4 % rise, because everything we've been hearing from the builders including one. >> translator: -- reporting june was a spectacular report what's interesting is the supply of homes for sale. it was at a 5.6% sale in supply. now it's 4.7-month supply. and the median price of a newly built home 329,200 it was about $311,000 in june of

2017 it's more this year. another thing i want to look at is specifically where we're seeing the sales we're seeing them across the board nationally but we're seeing big jumps in the northeast, and especially in the midwest as well. and the west but that northeast number up 89% month to month that is crazy, and then we're seeing 18% month to month in the west just the south up about 7% that seemed to be the weakest. that's where the build the most homes. we want to look at the price range it's selling the most. we're seeing the most homes sold between the 200,000 and $300,000 range. that's a change from the month before we were seeing the 300,000 to $400,000 range this is the first-time entry level buyers going out to the builders because they can't find a home they can afford in the existing home market. that's why the builders are seeing so much and again, yesterday a report of a sharp increase in the first-time home buyer.

we want to look at the supply of homes selling at tend of the period we had the most homes selling in the underconstruction range. that opposed to the finished range or the not started yet so we're seeing a drop in the number of homes that are available for sale that are completing actually, a sharp drop that's because the builders basically stopped production in march and april. so they really had nothing to sell that was completed. so that's a drop in the number of completed homes for sale. and a very sharp increase in the number of homes that are under construction for sale. so builders clearly ramping up, buying land again, getting their labor back on track. again, morgan, this is a spectacular june number, and i'm going to say not unexpected on my part, at least. >> yeah. thanks for breaking down all of the details within that report certainly very big numbers, and significant coming off of that existing home sales number earlier in the week, diana, the earnings story today, though, is intel. dragging down the dow after

issuing disappointing guidance and announcing a delay of the next generation chips. john fort will sit down with ceo bob swan in the next hour, but for now, he joins us to break down the results hey, john. >> hey, morgan it's not even about the results. the reason the stock is down almost 17%, right now 17 % this morning, it's really about a process. it's really about manufacturing. manufacturing of chips right now intel has been working on what it calls the 10 nanometer process. that refers to the sophistication of the chips that intel is manufacturing now, the smaller the number gets on the nanometer process, the more complicated the chips are to manufacture it's kind of like narrower pathways on the chips for the transistors. and intel really had a lot of trouble moving to ten nanometer. we've talked about that for about four years the expectation was okay, well,

they're getting back on track and with the seven nanometer process coming up, we're going to be back on track. intel announced they're, in fact, not on track and the yields, meaning the number of chips that they're able to reliably turn out under the process they're working on is too low that means their manufacture process is not efficient enough. bob swan, the ceo saying they had identified what the glitch is, the problem, and they're confident they're going to be able to get that fixed but it's pushing out the rollout of seven nanometer by six months meantime, you have all these other things going on in the chip business. tsmc which manufactures chips for intel's rivals is on seven nanometer, planning to move to three nanometer in 2023. there are questions about even once intel gets to seven, if they get there on the revived schedule, how far ahead are competitors going to be and, of

course, as we're talking about all of this, guys, we were just talking a couple weeks ago about apple saying they're moving away from intel chips, the number of analysts on the street down played that saying it's only 3% or two of intel revenue. i think they are underestimating the potential impact here. because it's not just about revenue. it's also about the sophistication of the chips, the higher-end chips that apple tends to use i'll bet you the profit impact is potentially more than that when you layer in the impact of more people saying well, if apple can move away from intel, maybe others can too it certainly sets up a challenge given what we heard on the call last night >> yes it certainly does, and that's being reflected it would seem to a certain extent in that stock price. john, we'll see you later with bob swan looking forward to that interview. important one. let's focus on intel bernstein downgrading the stock to an underperform

lowered the price target to $45 a share. the analyst is stacey who joins us now stacey, why the decision to downgrade the stock? >> as most of my clients know, we've been negative on the stock structurally for many years. we were underperforming entering this year. i upgraded tactically in the trough of the co-vid panic in march around $50 just because i figured in the middle of a pandemic maybe we have other things to worry about. the structural issues were already there and getting worse, and at this point they have blown wide open. there's no reason not to be there. and you have to think about this the stock right now is virtually unownable as far as i'm concerned. the numbers almost don't matter. i think we heard it. but it's true. let's imagine that they're sandbagging the second half and bob tends to do that anyway, and let's say they beat. who cares? nobody is going to buy it. if they miss any kind of

negative data point at all it's going to strengthen the -- i think the risk/reward is massively asymmetric to the downside there's no reason to own this. we have to be underperformed at this point >> right what does it say about the execution at the company john brought it up his analysis in terms of inability to be hit the targets for the seven nanometer technology >> people forget, like 14 man ne n nanometer, it was delayed when it came out. it didn't matter back then because they had a five or six year process with ten nanometers because it was delayed for so long, it ate into the budget. by the time it got there, the budget was gone. but i think investors were

finally getting comfortable. ten nanometers is not great but it's at a state where they can start to ramp it and they're doing that people are hoping ten would be a relatively short note and they would quickly move onto seven and regain the competitiveness that's completely gone now now who knows? right? the window is getting wider and wider now. and just because they say the process is delayed by 12 months and the cpa products are delayed by six months, who knows they were telling us that all along with ten nanometers. we have no idea when seven nanometers is going to be here even though they're suggesting they know what the problem is and the fix is, they obviously don't know what the fix is if they did, they wouldn't be talking about contingency funds which talk about changing their business model this is something -- they have no clue how to fix this at this point. and with that uncertainty, this overhang is going to be there no

matter what happens to the numbers. at least over the next year, probably two years, maybe longer we'll have to see. >> i remember when stock largely used to trade around margins and it's kind of jarring to see the margins now. i wonder if you're going to prioritize trouble is it about margins? is it about the next generation production or shares from the likes of an snl. >> they've been talking margins down for a year and a half at the endless day, when was that i can't remember a year ago, maybe longer they actually guided 2021 gross margins to 57% and margins have been coming down ever since, but they've never hit that level i don't think they were lying. i think they were serious. the reason the margins in the near-term are coming down, they're accelerating the ramp of ten nanometers

ten nanometers is not 14 14 it's at the point where it's a great process. 1e7b nanometers, the yields are not great. they're at the point where it's rampable but they're not great the more ten nanometers you get, but it makes them more competitive. again, now with the seven nanometer, all the other stuff comes into play. it's the margin compression, but it's also the share loss and the general competitive environment. what's new there's like this existential crisis, this fight with themselves right? versus their history versus what they need to do now. they have to dig themselves out of a hole and the window they have to do that is -- they're in a very bad position now to handle that. they're coming up from a position of weakness rather than a position of strength >> yeah. >> stacey, i'm listening to you. you sound fired up here and certainly you didn't mince words in your report this morning,

your downgrade this morning. you weren't the only analyst is downgrade. i feel like there's an emotional response that seems to be playing out in wall street in general. it's almost like a fool me once fool me twice type of scenario i wonder what you think this means for bob swan some of the issues he inherited when he became ceo, but what do you think that timetable looks like for him to be able to reverse the ship and execute on all of that? >> presumably, this is why they fi fired the ceo before him bob did inherit this but at the same time, bob is kind of in the w the perception is he's there because they couldn't get anybody else if you remember, they had been looking for six or seven months. they had an earnings report. he was still the acting ceo at that point, and then they gave him the official job a weak after that earnings report to me that suggests that may have been closer with somebody

else and it fell through there's no other reason not to have announced him on the earnings call at that time that's where he is and don't get me wrong i actually do like bob i think bob is a good general ceo, and he's good at managing expenses and everything else but he's not -- he's not technical. george davis is the cfo. the company's backbone is a medical technology and bobby his own admission won't be able to accurately judge with his technical bench is telling him and to be fair, the former ceo had it and screwed it up just being technical isn't enough, but it may be necessary but not sufficient so i don't know what's going to happen, but at this point we'll have to see what they do at least bob may be more open to making the hard decisions but it's going to be a tough transition

>> finally, we've been putting up amd shares with intel are they are true beneficiary of intel's troubles >> who knows what the numbers are going to be? they report next week. intel's desk top numbers aren't great. amd is a narrative it's a story in the near-term numbers now probably mean less that narrative just got blown wide open again like if you figured it was limited at this point, at some point you thought intel was going to catch up and that would limit where you could go like, what's the limit now it's a lot more unconstrained that the dream is more unconstrained than maybe it was yesterday. and so i'm not surprised that amd is up. whether or not they benefit in the near-term, probably nothing is going to change but if you're owning it on a beautiful narrative, it's less constrained than it was. >> yeah. interesting. stacey thank you. appreciate you taking time this

morning and for your enthusiasm. >> meantime, the white house this morning is urging china not to engage in what they're calling tit for tat retaliation as the battle of consulates continues. let's get back to beijing. >> hey, carl the foreign ministry accused the american staff at a consulate of interfering in china's internal affairs. a state media says the staff there now has 72 hours to close the koconsulate. they suggest this was chosen because of the important role it plays for the u.s., gathering information on tibt and t strategic weapons and because it's smaller than others it's not as significant as shanghai or others and not as important to american business so it's seen as more of a match in the chinese eyes to the consulate in houston state tv set up a live camera

outside of the consulate in order to broadcast to the public what has been going on out there. the police presence was very heavy today. 38 million people at peak time logged in to watch many commented the war of words continues to escalate chinese foreign minister said a -- the german counterpart saying that all the blame is solely on the u.s., and that no country he said with a conscience would side with the u.s. on china. pressure on some of the other countries watching this. his comments, of course, come after secretary of state mike pompeo made a fiery speech where he called on countries within the free world to ban together against beijing, or risk from his point of view, becoming

complicit in what he described as china's abuses of the global system >> thank you for breaking it all down and as you heard there, those new china tensions also intel are really what is driving today's trading action as the s&p joins the dow and the nasdaq in negative territory for the week with all three of those averages under pressure today. we break down the market action with chief investment officer of the chicago teacher's pension llnds which manages about $10 biion in assets. that's coming up next. stay with us some companies still have hr stuck between employees and their data.

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dow session highs here down only 69 points our next guest says investing with diverse asset managers helped her portfolio over the long-term. the chief investment officer of the chicago's teacher's pension fund which manages around $10 billion in assets. angela, thanks for joining us. >> happy to be here. thank you. good morning i want to talk with you about diversity in a moment, but quickly on the markets here, i wonder given the week we've had, the chop, the reception some of the companies have gotten post earnings, if you think that growth valuations are really running into a reality check or if this is another head fake >> well, i think with the week

of earnings and the selloff yesterday, and i thought that there were mixed results and yesterday seemed to be the opposite of how we started the week for me, it signalled more volatility ahead and that the growth stocks were really overbought and overheated. but it also may have signalled to investment managers, you know, which stocks to buy and which ones to trim so i think before i said that tech stocks and stay at home stocks were stocks we were watching but i'm not a stock picker, and i select managers, so i think, you know, this week has really reinforced for me to monitor more closely our valuations with our growth stocks that our growth managers are invested in and to maintain value exposure at this particular time. >> does value exposure run into

trouble when we start talking about jobless claims up for the first time since march at least a pause of reopening in certain parts of the country 4 million cases? how much room does value have to absorb some of the rotation here >> i think it's really a challenging time for a value manager and value stocks and again, i don't pick stocks, but i feel like all will fall in or out of fairs at some point. since growth has been raging for so long, we just have to maintain our exposure and be diversified across value as well as growth. >> angela, with a ten-year yield hitting the lowest level since march 9th 9, when it hit the record intraday low. five-year hitting a new intraday record low today or earlier this morning as well. given the fact that the low rate environment just seems to be getting lower, at least staying

lower for so much longer, how is that shaving and shifting the investment choices you're making right now? >> well, the low interest rates are an impact on our investments, but we are diversified across real estate and our fixed income managers that try to balance out with where the equities are so, you know, regardless of whether inflation is low right now or interest rates are low or what we expect in the future, it's kind of hard for us to lean in one way or another or take bets one way or another. so we try to balance out the portfolio that whatever happens, you know, we're pretty much defended against what transpires in the future. >> finally we started off the segment talking about diversity of asset managers.

what exactly do you mean and can you point to metrics where it actually trickles down to bottom line performance >> if we back up, our chicago teacher's pension fund has been a leader in embracing and encouraging diversity. 46% or 4.8 billion of ctpf's total assets were managed by firms owned by minorities, women, and persons with disabilities that's an intentional focus, and we believe prudent as it has been proven that diversity can drive returns and diverse managers perform comparable to mainstream managers. specifically in our portfolio, diverse managers have added diversification by complimenting the larger managers who operate in a larger market and invest in larger assets. we like to pair them with diverse managers that operate in

middle and middle market or lower middle market. and invest in smaller assets you know, we believe that smaller size, the smaller size of diverse managers really creates more flexibility and nimbleness and it gives the fund exposure to less crowded and less competitive spaces of the market and that increases the diversification of the portfolio. i think it's a great time to invest with diverse managers that can defend in types like yesterday and today, and when big names are selling off, or that can help by investing in unique opportunities that only a smaller diverse private equity or real estate manager can i think with the metrics, you know, we just look at our performance as a whole, and compare different styles but definitely those diverse managers have contributed to our

long-term performance. >> yeah. that's the point is finding the undiscovered gems. chicago teachers, thanks as always good to see you. >> thank you good to see you. >> it is time for our etf spotlight. and today we are taking a look at the semi conductors etf ticker usd down sharply up more than 25% in the last three months you can see it's down 6% today why are we highlighting this it's the etf with the largest exposure to intel, and that stock carries a weighting of over 12% in the fund and getting hammered into these trade. down almost 16% right now. on pace for the worst earnings drop in nearly 20 years. intel ceo bob swan is going to join squawk alley in the next hour meantime, stay with us anything your wild child does

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welcome back, everybody. here's your cnbc news update at this hour. a u.s. fighter jet came close to an airanian passenger plane t. the iranian pilot had to change course quickly to prevent collision.

nbc cannot independently verify this video a u.s. spokesman says the fighter jet kept a safe distance turkish presidentered wan joining thousands for the first prayers. he's faced international condemnation over the conversion of that site back into a mosque. and baseball season here at home is back underway. a number of teams held moments of silence to support the black lives matter movement including the washington nationals and the new york yankees infectious disease expert and fan dr. anthony fauci threw out the first pitch for their game which unfortunately did not help the home team. the nats lost 4-1, but it was a great moment i'll see you next hour "squawk on the street" continues after a quick break. this is decision tech. find a stock based on your interests or what's trending. get real-time insights in your customized view of the market.

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arizona continues to be a co-vid hot spot, closing gyms and bars for another two weeks as cases see a resurgence across the state. our next guest owns several gyms in arizona her parent company recently suing that state, arizona over the initial decision to shut down locations joining us now is pure barre's ceo. thank you for being with us today. i think we might be having some technical difficulties with the audio right now. as soon as we can bring sara back up, we will in the meantime, taking a look at the markets right now the dow is down half a percent being led lower by apple and intel. the s&p and nasdaq are lower the nasdaq the underperformer as big tech continues to sell off on pace for losses for the week for all three of the averages.

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pampers cruisers 360° fit financial stop strategists say the divergence between the small cap is telling a story of where the rkmaet is heading next more "squawk on the street" is coming up.

welcome back to "squawk on the street." where we left off before the break, pure barre president is back and joining us after technical difficulties a few moments ago. sara, thank you for being with us >> thank you so much for having me >> so just to recap, you have over 500 locations about how many of your studios are actually reopened in the u.s. and given the fact that we have seen the surge in coronavirus cases, and a pause being put in place or even a rollback in terms of reopenings in some states, in some markets. how many are still open, and have not been affected by that >> like so many others in the industry, we have been affected, and our 550 locations had to pivot to virtual operations immediately as soon as the pandemic hit however, we have operated in an incredibly nimble and resilient

way. we're back open with 77% of our system the remainder still closed are still operating with virtual classes and other fun events such as tip and shop and other retail events to keep the community excited at their local level. >> we saw so many different gyms and boutique exercise brands roll out virtual offerings in that initial wave of shutdowns you did something a little bit different. you added more of a social element to your offerings as well how did that help you and pure barre's franchisees to weather the storm and how is it fitting into the business model as the reopenings continue? >> one of our strengths here at pure barre is the way we engage our local community. and our franchise partners are so passionate about not only fitness but making sure we have

a home and a safe place for our local patrons to come in and work out and be together so we were able to reproduce that to the best of our ability to our virtual experience with the various events that we most hosted the virtual event was the class and then we hosted different social hours that allowed our patrons and members to feel there's still a sense of normalcy, even though everyone was behind either zoom or facebook live and working out from the comforts of their home. >> i want to get your thoughts on the decision by exponential, your parent company to sue arizona over closing gyms. it looks like a judge struck that lawsuit down. the fact that it was brought forth, your reaction, and i guess why it was so crucial to see a suit like that put in place in the first place >> we believe now more than ever that people need to get back to their workouts to maintain their

health and enjoy the physical and mental benefits that exercise can provide so our focus has always been the well being of our members and providing avenues for people to exercise and build their immune system, and right now that's just incredibly critical not only in arizona but across the country. so in arizona we have 11 studios all of which opened with the strictest cleaning and safety procedures and we are ensuring that our members as well as our staff are healthy and in a safe environment and that has remained our number one priority so as we reopened, we introduced contactless check-ins. some are taking temperatures at the beginning. of course, appropriate ppe throughout the experience, and we've done a measure of upgrades to the studios to ensure that we continue to have the safest and healthiest locations before the exponential team d

purebarre sent multiple letters. we reached out to the governor's office to engage in conversation and it just -- it appeared that we had to go the extra mile in order to get their attention while we didn't achieve what we had hoped for, the effort did give us a new sense of resolve as we continue to advocate for what we believe in and continue to stay the course of remaining compliant and making sure we're back with our virtual operations >> finally, for the locations that are open, have customers, have consumers been coming back? which has demand looked like and how does it fit into the overall outlook for the boutique fitness industry we know a lot of people have become very familiar with exercising at home whether it's pel ton or some of the virtual offerings. >> yeah. it's a great question.

and definitely concern that's out there. our outlook for pure barre and the industry is bright we're navigating as things roll back across the country. it takes a couple weeks for the recovery of the membership base. we were monitoring it in states that opened early on like alabama, florida, georgia, oklahoma what we're seeing is that as early as april we were recovering over 63% of our revenues in may that jumped to 74%. that june it was higher. we are seeing a great resilience with our membership base grateful for those who continue to support us throughout the pandemic, and the franchisees have done a phenomenal job of keeping the community vibe and bringing it back to the studios once we have reopened. >> sarah, thank you for joining

us today >> thank you so much news about a possible lifeline for brooks brothers from simon brothers. lauren joins us to talk about that interesting chapter as we continue to see, lauren, the mall operators offering a helping hand >> absolutely. thanks for having me, carl yes, we broke news overnight that simon property group along with someone else have made an offer to acquire brooks brothers and they would look to keep more than 125 stores open when brooks brothers filed they had a little more than 200 stores still open. what's interesting in the structure of the deal is they created a new venture, an llc

they're looking to do the deal through that spark group a different structure which they've also -- spark also owns forever 21 stores and they teamed up in the past to rescue retailers out of bankruptcy. again, this offer is still open to other bids at this point and there's a court date set for late in august for approval. so there is a whp global, another licensing firm i spoke to their chairman last night he said they're looking to make a bid as well. so certainly it's not a done deal at this point, but simon has made this bid with authentic brands to try to save brooks brothers >> it's interesting. what do you think the calculus is in terms of which retailer to offer assistance to? is it who will withstand or which could help drive mall traffic overall if they survive? >> right great question

i think it's something we're all still trying to wrap our heads around at spark. simon and abg are also the stocking horse bidder at this point for lucky brands, a denim company that filed for bankruptcy during this pandemic. and so to try to look at the strategy, i mean, obviously in many cases simon does have a lot of these stores. these stores that -- with the retailers as they file for bankruptcy and simon is often one of their biggest landlords certain i i think some of the rationale is if they buy the companies, they can -- they suddenly have access to sales and data, and they just have this access like they've never had before and can control that real estate much better. you know, there have been i think as of this week with athena filing for bankruptcy, there have been about 40 bankruptcies in 2020 already and so i don't think simon is going to be able to save all of

them they're being selected as i talk to analysts, folks say brooks brothers is a brand that is well recognized globally. and it still stands for something, but in this new era of this pandemic and we're all working from home, i don't know, do men need suits anymore? i think it raises a question there. >> it's been a while since we've worn a full suit lauren, thanks we'll keep on eye on this with your help. she does an amazing job covering retail for us. the president commending elon musk for his decision to choose austin to build the next billion dollar factory we're going to check with tin wh mayorof austin on the platnsorhato wn imicio f tt wnhe we return. save hundreds on your wireless bill

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tesla as you know by now is headed for texas musk announcining on the earnin call the company will build the next gig factory in austin the president praised the move in a tweet with elon musk responding, quote, we look forward to building giga texas joining us is the mayor of austin great to have you back good morning and congratulations. >> thank you good to be back and we're excited in austin. >> i can imagine can you tell us a quick story of how itcame together in the end >> well, obviously our understanding was there were a lot of cities that were all trying to land this. for us, it's real important in

austin we have -- we're blessed and lucky to have a lot of really high paying jobs but where we're deficient is in the middle skill jobs. the opportunity to be manufacturing with thousands of middle skilled jobs, clean issu with a tech tie, that matches up to austin and it is being located in a town that historically has not had economic engineengines. it hitscylinders for us >> we're looking for details on tax breaks that is normally what people people and do you feel like you got a good deal. >> the city didn't do any incentives the school district in the area gave an incentive, but the way that school finance works in the state of texas is nothing but

benefit for them and then the county in the area gave relatively small fax break incentive that will generate additional funds we're investing a lot in the city and have been on workforce development to try to increase the middle skill opportunities, so it was consistent, but this was not driven by the incentives >> i'm curious what the economic impact will be austin has already been a city and a metro area that has been bringing in quite a number of companies, especially tech companies, and also army futures command. but with tesla now building a factory there too, do you expect it to bring business to the area >> we think it will help a lot we have a lot of tech companies here apple announced a billion dollar

program here but what this represents, i think, is a little different we're excited about having the opportunity and taking people from places where they're not making living wages and move them into manufacturing jobs we're also real hopeful that this is going to lead to a lot of satellite suppliers and businesses that will want to be near a factory like this what they have on the east side of town is a mining site that looks like the surface of the moon but they can expand that and we hope and expect that they will a lot of the satellite suppliers we expect to come along. and now that we and so many

cities are so challenged right now with perpetually losing jobs, we think about coming out of the backside of the virus, which one day we know will a >> i want to cut gears a little bit. we have seen a big surge in the recent weeks in the state of texas and it looks like in austin specifically, the new cases are down hospital admissions are leveling off. if that is the case could we be seeing a peek that is coming and going. what would we attribute to that. >> the debate happening in and around the country about whether

or not masks are important are not, you just need to look at austin a little over three weeks ago all of the modelling that we would over run our icus we were just creaming on a trajectory that was rising. the ability to have a masked mandate not to give peopticketst the mess anning saying this is important and this is something that people need to do and that happened here. our community hard that message conveyed that way and the mask wearing went up significantly and when that happens the virus goes down. and we're one of the examples that everyone should be looking

at that reduce that issue to a partisan discussion. it is the most effective thing that we have been able to do >> i have been to a formula one in austin. it is amazing. i noticed today that f 1 is scrapping all of them and they're adding three to europe does it strike you on how they have done the pandemic >> yeah, the race here is hear breaking it is one in a series of heartbreaks. shutting down the south by southwest. but yes, if you look at the numbers that are happening in the united states right now, we are losing events to europe

because they're better handling the virus, it is real frustrating. we got to a place where a a lot of the country was able to shut this down. we will bring the numbers back down again we have to do bet better than we did in may >> we're happy for you a drink thing for texas and austin >> great, thank you, be save bob swan will joins uin a few minutes. in the meantime don't go anywhere anything your wild child does

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>> it is not just friday for you, it is a longer eer materny leave. we will miss you, we can't wait for the news, our best wishes to you and matt >> thank you, i am going to try not to get choked up and cry >> and also it is national tequila day, i don't know that you will be partaking, but i will make sure i do to cheers you to good health and your growing family becoming a mom for the second time over, the arrival of a son,

i'm calling him baby boy right now. we will name him after we meet him so for the next few months i will be focused just on my family i hope the news cycle slows down a little and i don't miss so much, but i have a feeling that will not be the way, so all of the best >> knowing you you'll be phoning in with tips on news on space and logistics. have a good weekend, you too, david. we'll see you on monday. happy friday, everyone welcome to "squawk alley." we take stock of a market trying to hold on on th